On taxes and infrastructure, set our cities free

Steve Lafleur: "Rather than demanding more money, big-city mayors should be asking the federal government to stop intervening in municipal affairs."

The Canadian Federation of Municipalities (FCM) launched an initiative to pressure parties into adopting a national strategy to reduce commute times in major cities. Their Cut My Commute campaign calls for parties to commit to replacing recently expired transit funding of $400 million, legislate targets for public transit access, and use tax policies to encourage transit use.

Commute times are certainly a major issue for urban residents. A recent survey of traffic congestion in 19 major cities around the world found that Toronto has the worst traffic congestion—worse than New York, London, and even Los Angeles.

This isn’t just a minor inconvenience. The GTA alone loses $5 billion annually due to excess traffic congestion, and Torontonians lose an hour and 20 minutes of their day commuting. This is a crisis that needs to be addressed promptly. However, federal involvement in transportation won’t be the solution to this crisis. It part of the problem.

The FCM is right to point out that cities are handing more money to the federal government than they’re getting back. But the solution is not to beg the feds to transfer more tax dollars to cities. They need to stop collecting money for infrastructure in the first place. The best spending decisions are made when they occur at the lowest level possible. By making municipal politicians directly accountable to voters for both collection and spending of infrastructure dollars, cities will get better results.

Unfortunately, the federal government is often involved in both financing and planning infrastructure programs. Not only does this lead to undue politicization of infrastructure decisions, but it also takes decision making power and accountability out of the hands of municipal politicians, who likely have a far better idea of how to run their city than politicians in Ottawa.

You don’t have to look further than Toronto’s subway system for an example. The federal and provincial governments pledged money to extend the system all the way North to Vaughan. Yet if you asked Toronto voters how they’d want to spend this money, I’d bet they’d be much happier to put that money towards an east-west line around Queen Street, such as the downtown relief line, which has been on the backburner since the beginning of time.

For some reason, senior levels of government think that building north is an appropriate use of money. A cynic might point out that this alignment runs through hotly contested federal and provincial ridings, so this spending decision likely has a political upside for the parties in charge of the pursestrings. That’s hardly a justification for the project, but this is the kind of decision-making that happens when you get three levels of government involved in an infrastructure project.

In a Calgary Sun column last week, Calgary Mayor Naheed Nenshi — a vocal supporter of the Cut My Commute initiative — pointed out that one of the biggest problems facing cities is a lack of taxing power. The only tool other than user fees that cities have for raising revenue is the property tax. But as he points out, the property tax is about the worst way to raise revenue.

Rather than demanding more money from the federal government, big-city mayors should be asking the federal government to kindly refrain from intervening in municipal affairs. While they’re at it, they should tell the provinces to do the same.

Instead of more federal funding, they should ask that the restrictions on municipal taxing powers be removed so that the whole country doesn’t have to vote on whether Toronto needs a new subway line, or whether Moncton needs a new highway.

Just transferring more money to cities isn’t enough to solve our infrastructure problems. Cities need full control over infrastructure projects, including revenue generation, if we are going to properly address municipal infrastructure deficits.

But this will only happen with leadership from the mayors of Canada’s biggest cities. Are they prepared to go to their own municipal taxpayers to fund infrastructure projects, or would they prefer to let senior levels of government continue to do the dirty work? The fact that the FCM is making gridlock an issue now, rather than during the last round of municipal elections, doesn’t bode well.

Steve Lafleur is a public policy analyst based out of Toronto. For more information, visit his website at www.stevelafleur.com.

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